Environmental Defense Fund and Walmart: a case study on transparency

“Companies are under pressure to demonstrate leadership in sustainability. Without transparency, however, no one will know about any progress companies are making. That means the company will not be trusted, and for many companies trust equals customer loyalty and sales.”
—Rick Velleu, Environmental Defense Fund

Since setting up an office in Bentonville, Arkansas, in 2007, the Environmental Defense Fund (EDF) has made impressive strides with Walmart to improve the social and environmental sustainability and responsibility of their myriad supply chains. Walmart is emerging as an unlikely leader amongst large-scale brands when it comes to addressing supply chain challenges and being open about them. By setting big-picture goals, and identifying environmental and social hot spots in supply chains, even large-scale retailers can change significantly for the better; the ripple effect can be enormous.

In reference to Walmart’s relief work during Hurricane Katrina in 2005, when FEMA was coming up short, EDF’s Rick Velleu says, “This opened their eyes to the power they have to do good, and the positive feedback those actions can create.”

Like many organizations and companies SeaWeb interviewed, this case study reinforces that transparency is a simple, credible way to communicate a company’s good management practices to customers, investors, and supply chain partners. Read more background on Transparency >>

Although there is still significant room to improve, a high bar is being set. Read the full case study below to understand their collective efforts over the past ten years, and to see what’s next for large-scale retailers in an increasingly transparent corporate landscape.

Continue this conversation with us at the 2017 SeaWeb Seafood Summit in Seattle, June 5-7, where Walmart will join us as we look back at the past 20 years of the sustainable seafood movement to inform the next 20 years.

Deeper dive

The approach

Transparency is key to credible environmental and social sustainability.

To make meaningful improvements, we encourage our partners to be transparent by following a three-part process:

Come to an understanding of how your operations and supply chains work, and what impacts they have on people and the environment,

Use that understanding to publicly set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound), and

Measure, track and report progress publicly.

“Transparency is key to credible environmental and social sustainability.”

The catalyst

Transparency is strategically important because it’s just good business.

Walmart’s sustainability journey started with Hurricane Katrina.At a time when FEMA was proving to be ineffectual, Walmart was able to provide devastated communities with the essential supplies they so desperately needed.That experience came with something Walmart executives simply weren’t expecting: lots of good PR and media coverage. This opened their eyes to the power they have to do good, and the positive feedback those actions can create.

This “a-ha” moment began the momentum that grew into three aspirational goals:

To be powered by 100% renewable energy;

To generate zero waste;

To sell products that sustain people and the environment.

Transparency is at the core of each of these goals, which have proven to be good for both Walmart’s customers and its bottom line.

“This opened their eyes to the power they have to do good, and the positive feedback those actions can create.”

How they prioritized

A membership organization comprised of retailers, major brands, NGOs and universities, TSC’s first action was to identify the top social and environmental hotspots for products. Next, TSC created a series of surveys that retailers like Walmart could use to query its suppliers to give them a baseline understanding of how they were performing and where there were opportunities to improve (i.e., transparency into their supply chains).

These surveys also helped do two other things:

Inform companies that supply retailers like Walmart with information about the impacts their business is having; and

Provide data that could be aggregated and shared publicly, enabling customers, investors and the public at large know more about the impacts of the products they buy and use.

Because of the TSC’s work, many companies now release an annual sustainability report to publicly share their sustainability goals and progress.

“…the Sustainability Consortium (TSC) was created specifically to help retail entities navigate these transparency challenges.”

The return on investment

Companies are under pressure to demonstrate leadership in sustainability. Without transparency, however, no one—not its customers, its shareholders, its associates nor the public large—will know about any progress companies are making. That means the company will not be trusted, and for many companies trust equals customer loyalty and sales.

So transparency has a direct connection to the bottom line through consumer trust.

“…for many companies trust equals customer loyalty and sales.”

Adapting to the future

Currently, making supply chains transparent is difficult: much of what is being done right now is largely manual, making the process both time and resource-intensive.

To really scale transparent behavior, the big challenge ahead is simplifying the current systems and processes. We need sensors, data systems and reporting systems that will allow transparency information to be collected all the way at the beginning of supply chains—at the mines, farms and fisheries— and then effortless reporting down the supply chain through brands, retailers, and final customers.

For this to work, however, companies may need to make it a requirement, pay a cost premium, or find ways to protect the privacy of upstream providers.

“To really scale transparent behavior, the big challenge ahead is simplifying the current systems and processes.”

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